A national service has lowered the rating by two notches on West Warwick bonds as the Town Council prepares a budget for a voters' referendum.

A national service has lowered the rating by two notches on West Warwick bonds as the Town Council prepares a budget for a voters' referendum.

Fitch Ratings lowered to BBB- from from BBB+ about $12 million in several series of general obligation bonds issued by West Warwick.

The bonds also have been placed on rating watch negative, according to a report by Fitch, based in Chicago.

West Warwick's Town Council has endorsed an $83 million budget for the next fiscal year that is balanced but fails to replenish the ailing pension fund.

Council members said they are working to extract concessions from local unions that will help raise money for the fund, but there's not enough time to get those agreements in place before the budget is decided by voters at an all-day referendum on Thursday.

State officials have warned the town that they may step in to resolve West Warwick's long-standing financial problems if local officials fail to do so.

"The reality is we're making our best effort to do what the state wants," council vice-president Edward Giroux said. "The problem is we ran out of time."

The budget includes a small tax increase for single-family home owners and larger increases for the owners of multi-family homes and businesses. The spending plan will be presented at a public meeting at 7 p.m. Tuesday at the high school.

In its report that lowered the bond rating, Fitch said, "The two-notch downgrade reflects the growing budget pressures due to insufficient progress towards alleviating very high
unfunded pension and other post-employment benefit liabilities. A history of annual pension contributions significantly below required levels has exacerbated unfunded levels and substantially increased future funding costs."

Fitch said the rating watch negative reflects concern over management's ability to achieve labor concessions to rein in growing long-term retiree costs and approve a fiscal 2014 budget that includes a higher property tax levy to support increased retiree contributions.

The budget pressures are compounded by consistent underfunding of retiree costs, statutory revenue limitations, a shortage of additional cost cutting solutions, financial exposure to school budget underperformance and a town charter requirement for budget approval by referendum, Fitch said.